Columbia Council urged to refund $8.7 million

Surplus funds would offset high property assessments

November 16, 2003|By Laura Cadiz | Laura Cadiz,SUN STAFF

The Alliance for a Better Columbia is urging the Columbia Council to rebate $8.7 million from surplus revenue to property owners now, making up for high assessment payments stemming from skyrocketing home values.

ABC, a citizens watchdog group, is also lobbying the Columbia Association to avoid further surpluses by operating a balanced budget.

"They use a budgeting procedure that's unheard of," said Joel Pearlman, an ABC spokesman.

Pearlman told the council Thursday that the $5.7 million surplus the association had for fiscal year 2003 should be refunded to all property owners to the extent that they overpaid to contribute to the surplus.

The association estimates it will have a $5.3 million surplus for fiscal year 2004, which ends April 30; ABC wants the association to refund $3 million of that to all property owners and set aside $2.3 million more just for homeowners in east Columbia.

Property assessments increased an average of 33.4 percent in east Columbia after the state reassessed property there last year, bringing in an extra $2.7 million of income in assessment revenue to the homeowners association.

According to the Internal Revenue Service, the association has the ability to offer all property owners rebates or credits against assessment charges in years when there is a surplus higher than budgeted without jeopardizing the association's nonprofit status. The association cannot offer refunds to just one part of Columbia, however.

But ABC is hoping east Columbians could get the $2.3 million through legislation that Del. Shane E. Pendergrass, a Howard Democrat, is drafting. She is working on a bill that would allow for a 10 percent ceiling on the change in assessment in the association's billings. The law would be retroactive to the recent increase in east Columbia.

If Pendergrass' measure does not pass, then ABC wants the $2.3 million to be refunded to all homeowners.

The Columbia Association's board of directors - whose members are the same 10 people on the council - was scheduled to discuss rebating $2.6 million of the surplus in the 2003 budget Thursday night. But the board reached that issue about 11:30 p.m. and decided to table it until its meeting Dec. 11.

Pearlman said ABC was disappointed that the board did not discuss the matter Thursday.

"It's not in the people's interest to have this drag on," he said.

Council Chairman Miles Coffman challenged ABC's proposal, questioning how the plan would allow the association to pay off its long-term debt, about $78 million. He said the plan would "pyramid that debt," adding about $7 million to $10 million.

Pearlman said that added amount of debt would be acceptable, explaining the debt should be in proportion to the assets that are purchased.

"Paying down the debt is a dream, and it's a dream financed on the backs of the people that live here today," he said.

The council has been studying ways to alleviate the rising assessment payments after home values significantly increased in east Columbia. Homes in west Columbia, which the state is now reassessing, are also expected to drastically increase in value.

At the board's budget workshop last month, members agreed - in straw votes - to lower the assessment rate a dime, to 63 cents per $100 of valuation assessed on 50 percent of the fair market value.

The assessment rate will be made final when the board approves the 2005 budget in February.

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